Tuesday, September 20, 2005

More on Gas Prices

My earlier musing are proving to be correct. In the news of late:

Utah, Wyoming and Colorado are sitting on an undeveloped play of oil that could dwarf the reserves in the Middle East.

Congress is moving to outlaw price gouging, although there is little evidence that it is actually happening.

OPEC recognizes that oil production is not the issue. Instead it is the lack of refineries to the extent that Kuwait is looking to build a refinery in the US.

The issue with the refineries is that over-regulation makes it too cost prohibitive for oil companies to build new refineries. While we have the potential to become independent from OPEC by developing our own oil reserves, it would do us little good at the pump. Congress' solution is a power grab in disguise. The legislation would allow the US federal government to further regulate industries even outside the oil industry. While no one wants price gouging, the best check on prices is solid capitalistic competition. What congress needs to do, instead of grabbing more power, is to relinquish power in the form of relieveing the industry of some of the unnecessary regulations that make it cost prohibitive to develop as necessary.


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